Does Your Credit Score Affect Car Insurance?
Updated May 28, 2026 · 4 min read
In most of the country, your credit history quietly affects what you pay for car insurance — often by a lot. It surprises many drivers, but it’s legal in most states and widely used. Here’s how it works.
What insurers actually use
Insurers don’t use your regular FICO credit score. They use a credit-based insurance score — a separate score, built from your credit data, that statistically correlates with how likely you are to file a claim. Studies have repeatedly found that people with lower credit-based insurance scores file more claims, so insurers charge them more.
It typically factors in things like payment history, outstanding debt, length of credit history, and types of credit — but not your income or the “hard inquiry” for a quote.
How much it matters
In states that allow it, the difference between excellent and poor credit can be hundreds of dollars a year — sometimes more than your driving record. It’s one of the biggest rating factors you can actually improve over time.
States that ban or limit it
A few states prohibit or restrict using credit to set auto insurance rates, including California, Hawaii, Massachusetts, and Michigan. If you live there, your credit won’t drive your premium the way it does elsewhere.
How to improve your credit-based insurance score
The same habits that build good credit help here:
- Pay every bill on time
- Keep credit card balances low relative to limits
- Avoid opening lots of new accounts at once
- Let your credit history age
Improvements take time, but they lower your rate at renewal in most states.
The bottom line
In most states, better credit means cheaper car insurance through a credit-based insurance score — though California, Hawaii, Massachusetts, and Michigan restrict it. Because insurers weigh credit differently, comparing quotes is the best way to find who rewards your profile most.